Norfolk Southern Corp. v. Oberly

Citation632 F. Supp. 1225
Decision Date08 April 1986
Docket NumberCiv. A. No. 84-330 MMS.
PartiesNORFOLK SOUTHERN CORPORATION, Norfolk Southern Marine Services, Inc., Lamberts Point Barge Co., Inc., Coastal Barge Corporation, Coal Logistics Corporation, and Coastal Carriers Corporation, Plaintiffs, v. Charles M. OBERLY, III, Attorney General of the State of Delaware, and John E. Wilson, III, Secretary, Department of Natural Resources and Environmental Control of the State of Delaware, Defendants, Delaware Saltwater Sportfishing Association, Inc., Kent County Levy Court, Natural Resources Defense Council, Inc., National Audubon Society, and the Sierra Club, Intervening Defendants.
CourtUnited States District Courts. 3th Circuit. United States District Court (Delaware)

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David S. Swayze, of Duane, Morris & Hecksher, Wilmington, Del., for plaintiffs Norfolk Southern Corp., Norfolk Southern Marine Services, Inc. and Lamberts Point Barge Co., Inc.; Jeffrey S. Berlin, and David E. Menotti, of Verner, Liipfert, Bernhard, McPherson and Hand, Chartered, Washington, D.C., of counsel.

Robert J. Katzenstein, and Clark W. Furlow, of Lassen, Smith, Katzenstein & Furlow, Wilmington, Del., for plaintiffs Coastal Barge Corp., Coal Logistics Corp., and Coastal Carriers Corp.

Fred S. Silverman, State Solicitor, and Regina M. Mullen, John J. Polk, and Ellen R. Chaikin, Deputy Attys. Gen., Dept. of Justice, Wilmington, Del., for defendants.

Nicholas H. Rodriguez, of Schmittinger and Rodriguez, Dover, Del., for intervening defendants; Lynne Edgerton, Sarah Chasis, and Ralph Hallo, of Natural Resources Defense Council, Inc., Joel B. Harris, Mindy J. Spector, Scott T. Maker, and Robert D. Helfand, of Weil, Gotshal & Manges, New York City, of counsel.

Anthony G. Flynn, Counsel to the Governor, Dover, Del., for amici curiae Michael N. Castle, Governor of Delaware, William V. Roth, Jr., Joseph R. Biden Jr., U.S. Senators, and Thomas R. Carper, Member of Congress; Morris, Nichols, Arsht & Tunnell, Georgetown, Del., of counsel.

Philip D. Saxon, of Duane, Morris & Hecksher, Wilmington, Del., for amici curiae Frederick C. Boucher, Member of Congress, John W. Warner, Paul S. Trible, Jr., U.S. Senators, Herbert H. Bateman, Alan B. Mollohan, Jim Olin, Nick Joe Rahall, II, Norman Sisisky, Harley O. Staggers, Jr., and G. William Whitehurst, Members of Congress.

Edward W. Cooch, Jr., of Cooch & Taylor, and Gregory A. Inskip, of Potter Anderson & Corroon, Wilmington, Del., for amici curiae Delaware Wild Lands, Inc. and Delaware Nature Educ. Society, Inc.

David G. Burwell, Washington, D.C., for amici curiae Nat. Wildlife Federation and Delaware Wildlife Federation.

William C. Carpenter, Jr., U.S. Atty., Dept. of Justice, Wilmington, Del., F. Henry Habicht, II, Asst. Atty. Gen., Jose R. Allen, David F. Shuey, and Margaret A. Hill, Dept. of Justice, Washington, D.C., for amicus curiae the U.S.

John K. Van de Kamp, Atty. Gen. of the State of Cal., Andrea Sheridan Ordin, Chief Asst. Atty. Gen., N. Gregory Taylor, Asst. Atty. Gen., and Linus Masouredis, Deputy Atty. Gen., San Francisco, Cal., for amicus curiae the California Coastal Com'n.

OPINION

MURRAY M. SCHWARTZ, Chief Judge.

Plaintiffs seek declaratory and injunctive relief preventing the defendant state officials from administering and enforcing against them the Delaware Coastal Zone Act ("the Delaware CZA"), 7 Del.C.Ann. § 7001 et seq., which prohibits plaintiffs' proposed activities in the Delaware coastal zone. Pending are cross-motions for summary judgment.1

I. Factual Overview

Plaintiffs2 seek to improve the competitiveness of their coal-exporting operations by establishing a coal "top-off" service at Big Stone Anchorage, which lies off the coast of Delaware in Delaware Bay.

At present, plaintiffs ship coal from the East Coast on colliers or partially loaded supercolliers, because East Coast port facilities are too shallow to accommodate fully loaded supercolliers. Fully loaded supercolliers, which have a carrying capacity ranging from 100,000 to more than 160,000 deadweight tons, represent a more cost-effective means of transporting coal.

Plaintiffs propose to load supercolliers partially at East Coast ports and thereafter the supercolliers would move to Big Stone Anchorage, where coal barges would "top-off" the partially loaded supercolliers before their departure to foreign countries. This top-off operation will reduce shipping costs, thereby assertedly making plaintiffs' coal more competitive in the world market.

Plaintiffs seek to use Big Stone Anchorage3 because it is the only naturally protected anchorage between Maine and Mexico with a depth of 55 feet or more.4 Because of its relative protection from the elements, Big Stone Anchorage is and has been used for oil-lightering operations that transfer imported oil from supertankers to smaller vessels capable of navigating in shallower East Coast waters.5

Plaintiffs began exploring the idea of a coal top-off operation in 1981,6 and first contacted Delaware state officials about the matter in late 1982. In February, 1984, after several favorable discussions with state officials, plaintiffs were advised to submit to the Delaware Department of Natural Resources and Environmental Control (DNREC) an application for a status decision under the Delaware CZA.

The purpose of the Coastal Zone Act, 7 Del.C.Ann. § 7001 et seq. (1974 & 1984 Supp.), is to "control the location, extent and type of industrial development in Delaware's coastal areas"7 in order to "better protect the natural environment of its bay and coastal areas and safeguard their use primarily for recreation and tourism." Id. § 7001. New heavy industry in the coastal area is entirely prohibited as incompatible with protection of the natural environment. Id. § 7003. New manufacturing uses and expansion of existing manufacturing uses in the coastal zone are allowed by permit only. Id. § 7004. Of central concern to this litigation is the statute's total ban on new offshore gas, liquid, or solid bulk product transfer facilities, id. § 7003,8 a ban the legislature found "imperative" on the grounds that these facilities "represent a significant danger of pollution to the coastal zone and generate pressure for the construction of industrial plants in the coastal zone." Id. § 7001.

On February 23, 1984, the Secretary of DNREC issued a status decision concluding that the Delaware CZA did not prohibit plaintiffs' proposal, because a coal top-off service was not a "bulk product transfer facility" as defined by § 7002(f).9 This decision was appealed to the State Coastal Zone Industrial Control Board ("the Board"),10 which reversed the Secretary. The Board held the coal top-off project was a bulk product transfer facility within the meaning of the statute and therefore coal topping-off was a prohibited activity. The Superior Court upheld the Board's decision, and the Delaware Supreme Court affirmed. Coastal Barge Corp. v. Coastal Zone Indus. Control Bd., 492 A.2d 1242 (Del.1985). Plaintiffs, relying upon the Commerce Clause, challenge the application of the Delaware CZA's prohibition of bulk product transfer facilities to their proposed top-off operation.

II. Legal Overview

The Commerce Clause is both an affirmative grant of power to Congress and a limitation on the power of the states. By its terms, the Commerce Clause grants Congress the power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." U.S. Const. art. I, § 8, cl. 3. In the absence of congressional exercise of that power, the Commerce Clause by its own force prevents the States from erecting barriers to the free flow of interstate commerce. Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 429, 440, 98 S.Ct. 787, 793, 54 L.Ed.2d 664 (1978); Cooley v. Board of Wardens, 53 U.S. (12 How.) 299, 13 L.Ed. 996 (1851).11 At the same time, however, "not every exercise of local power is invalid merely because it affects in some way the flow of commerce between the States." Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366, 371, 96 S.Ct. 923, 928, 47 L.Ed.2d 55 (1976).

In accord with the doctrine that Congress' power over commerce is plenary, see, e.g., Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 196-97, 6 L.Ed. 23 (1824), the Supreme Court has held that "Congress has undoubted power to redefine the distribution of power over interstate commerce. It may either permit the states to regulate the commerce in a manner which would otherwise not be permissible, or ... exclude state regulation even in matters of peculiarly local concern which nevertheless affect interstate commerce." Southern Pacific Co. v. Arizona, 325 U.S. 761, 769, 65 S.Ct. 1515, 1520, 89 L.Ed. 1915 (1945) (citations omitted).

Absent congressional guidance, the courts are called upon to make the "delicate adjustment of the conflicting state and federal claims" when a state regulation is challenged under the Commerce Clause. Raymond Motor, 434 U.S. at 440, 98 S.Ct. at 793 (quoting H.P. Hood & Sons, Inc. v. DuMond, 336 U.S. 525, 553, 69 S.Ct. 657, 679, 93 L.Ed. 865 (1949) (Black, J., dissenting)); see also Southern Pacific, 325 U.S. at 766-71, 65 S.Ct. at 1518-21. Three general approaches have been used to determine whether a state statute violates the Commerce Clause: a deferential balancing approach for "evenhanded" regulation; stricter scrutiny for "discriminatory" regulation; and a more highly deferential standard for certain safety regulations.12

In brief, plaintiffs urge the Delaware ban on the proposed coal-transfer operation is subject to strict scrutiny because it discriminates against out-of-state interests in favor of in-state interests and burdens foreign commerce. They contend that the prohibition fails to withstand that scrutiny and thus violates the Commerce Clause. Alternatively, plaintiffs argue that even under the more deferential balancing approach for evenhanded regulation, the ban impermissibly burdens commerce.

Defendants deny the...

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